A V RajwadeL: US model - Is it losing lustre?

Regime after regime in South America seems to be losing faith in the market's ability to deliver growth and equity.

As we prepare to welcome President Bush in a few weeks' time, India's attitude towards the possibility of sanctions being imposed on Iran is likely to become a matter of hot political debate. The Left is viscerally opposed to whatever the US may say or do and, as a corollary, supportive of even theological regimes like Iran's which have as much contempt for the godless communists as their hatred of the Great Satan. If today reflexive anti-Americanism is limited to the Left, a few decades back it had far greater political respectability. In the 1960s and 70s, we almost automatically leaned towards the socialist Soviet Union in opposition to the democratic United States. So much so that we constitutionally declared ourselves to be a socialist country barely four years before the largest communist nation, China, made a U-turn in its economic policy, remaining socialist only in name.

If we embraced a socialist constitution at an impeccably wrong time, are we now in danger of tying ourselves too closely with the US, believing in its continued dominance? Paul Kennedy's arguments in The Rise and Fall of Great Powers are worth recalling. Mr Kennedy's 1987 book was aimed at drawing a parallel between the US and earlier empires which went under because they were unable to sustain the material costs of greatness. Ironically, Mr Kennedy's thesis got proved in the Soviet Union, which imploded under the weight of its own inefficiencies and unsustainable economic burdens, just a couple of years after its publication, leaving the United States as the world's only superpower.

In the sweep of world history, is there a possibility that Mr Kennedy may yet be proved right in the US over the next decade or so? In his annual State of the Union address last week, President Bush claimed that "the only alternative to American leadership is a dramatically more dangerous world". But he also acknowledged: "In a new dynamic world, we are seeing new competitors like China and India." Lest this be misinterpreted, his spokesman hastened to clarify that "this is not about going up against China and India. This is about leading the world with models ... that keep our society strong."

It is worth spending a few minutes thinking about the political and economic models which the US represents: capitalism, globalisation, and democracy. Every post-War US administration has propagated them: unilaterally, bilaterally, and, wherever possible, through multilateral institutions like the IMF, the World Bank, and the United Nations. But, in the new century after the election of Bush Junior as President, there is increasing evidence that the model seems to be losing lustre.

Take democracy. Whatever the lip service it pays to democratic ideals, the United States is quite cozy in its relationships with many authoritarian regimes. It equally dislikes the winners which democracies often produce""Hamas in Palestine, the Islamic fundamentalists in Iran, and, in its own backyard, the recent election results in Venezuela, Bolivia, and Chile. On a different plane, the commitment to democracy and human rights has not inhibited the Bush administration from illegally tapping the telephones of US citizens; torturing Iraqi prisoners; kidnapping suspected Islamic militants from other countries and holding them in secret, CIA-run detention/torture facilities in Europe and the Middle East; and callously disregarding the loss of thousands of innocent Iraqi lives in a war started on a foundation of lies.

As far as the economic content of the Washington model is concerned, regime after regime in South America seems to be losing faith in the market's ability to deliver growth and equity. This is clearly discernible in Venezuela and Bolivia. Brazil elected, some time back, a leftist trade union leader as its President, and the Argentinean President recently sacked his economic minister for his pro-free market policies. Both Brazil and Argentina have prepaid IMF loans to gain more independence in framing policies. If the US model based on market fundamentalism is losing its allure in its own backyard, the contrast with Europe cannot be starker: not only are 25 countries already members of the European Union but several others, including Turkey, are waiting in the queue. Clearly, the centre-left European model, with its emphasis on state-provided social services and security, seems to be gaining ground over the market fundamentalism, which has been the hallmark of US policies over the last quarter century. Indeed, the US itself followed the social democracy model for half a century""from Roosevelt to Carter""till Reagan propagated the Robin Hood-in-reverse model (robbing the poor to pay the rich), and painted the government as the source of all problems. The establishment of course likes it!

An empire's strength comes as much from its political philosophy as its military and economic strength. In military terms, the US remains unrivalled. It also gains by attracting extremely talented students and professionals from the rest of the world, including China and India. In many areas, its research laboratories are at the cutting edge of new discoveries and inventions. And yet, one should not ignore the dark clouds shadowing the intellectual vigour of the American society, in the form of the increasingly influential Christian right. As Paul Hackett, a senatorial candidate, recently remarked, "The Republican Party has been hijacked by religious fanatics that, in my opinion, aren't a whole lot different than Osama bin Laden and a lot of other religious nuts around the world." And, historically, no fundamentalist civilisation with a closed mind has been able to maintain its leadership position""India, China and Arabia, all leading civilisations at one time, declined after they became inward-looking, closed societies. The Christian right, with its strong belief in the literal truth of every word in the Bible, is the strongest supporter of President Bush, who often claims to get orders directly from the Almighty himself""as does Mr bin Laden of course (no wonder, on Mr Bush's re-election, a British tabloid asked in a full-page headline: "How could 62,040,610 Americans be so stupid?")

But Mr Kennedy's thesis about the fall of great powers was based on their inability to sustain material costs. What about the US economy? More on this next Monday ("World Money" column).

avrco@vsnl.com